Best Practices for Businesses to Reduce Risks in Cold Email Campaigns

Cold email campaigns are a strategic approach to prospecting, relationship development, and outreach. They target potential clients and partners who have no history of interacting with your business.

Unlike a marketing email that is sent to an established audience or client base, cold email outreach is focused on introducing your brand, communicating your value proposition, and sparking a conversation with someone who might not be familiar with your company's products or services. And when they're executed effectively, cold emails can boost collaboration, generate new sales, and create long-term partnerships.

Ultimately, these prospecting campaigns serve as a vital tool and can aid in revenue generation and market expansion. Furthermore, cold email campaigns deliver a scalable method for initiating contact and growing your brand's footprint.

However, as with any business endeavor, cold email campaigns do not come without some inherent risk.

In this article, we will outline some best practices you should consider as you strategize on and implement this prospecting method at your company–so you can protect the longevity of your brand both in the short and long-term.

Risks Involved in Cold Email Campaigns

Despite all of the outreach benefits cold email campaigns can offer, business owners must be aware of the risks that accompany them, too. Some specific risks include:

• Legal Risks: Cold email campaigns must remain compliant with regulations, including GDPR, CAN-SPAM, and other data privacy laws. Non-compliance can result in big fines, lawsuits, and reputational damage.
• Reputational Risks: Poorly crafted outreach emails or overly aggressive messaging can lead to recipients viewing your communication as spam. This not only harms your brand's image but can also lead to your domain being blacklisted.
• Operational Risks: A cold email campaign can be deemed ineffective because of poor targeting, low deliverability rates, and uninteresting content–and this simply is a waste of valuable time.
• Financial Risks: Investing resources in email prospecting without taking the time to develop a sound strategy can result in a low return on investment–turning this into a costly endeavor for a business that has a limited budget.

Ultimately, cold email campaigns can be extremely beneficial to a company–but they need to be carefully managed so risk is avoided.

Understanding Compliance and Legal Risks with Email Prospecting

Let's first address some of the biggest challenges as it relates to launching and running a cold email campaign–and this comes down to regulatory compliance and data privacy laws… not just in the United States but around the world, too. Cold email campaigns must adhere to strict legal guidelines in order to avoid penalties and protect your business's reputation.

Here are some key regulations to be educated on:6dbab2cb53e8ab30651768e80c5b8e19

• GDPR (General Data Protection Regulation): This regulation applies to any business that targets consumers located within the European Union (EU)--regardless if the business itself is based in the EU. GDPR requires explicit consent to be provided prior to sending cold emails and also mandates that personal data must be handled securely.
• CAN-SPAM Act (United States): A law that enforces clear sender identification, subject lines that are truthful, and states that there must be an easy way to opt-out of receiving future emails. And non-compliance with this law is steep–in fact fines can be as high as $51,744, according to the Federal Trade Commission.
• CASL (Canada's Anti-Spam Legislation): A regulation that demands prior consent from recipients, no matter if it is expressed or implied. Additionally, the law imposes strict penalties on businesses who are in violation.
• Other Global Regulations: Laws can be different country by country. For instance, there is Australia's Spam Act and Singapore's Personal Data Protection Act (PDPA). Again, just because your business is not located in one of these places does not mean that you aren't beholden to the law. Businesses that have international prospects or potential audiences should engage in research about region-specific requirements.

Compliance with these regulations can feel like a big job. However, there are some ways to ensure your cold email campaigns remain compliant.

Always make sure to obtain permission (by way of an "opt-in”) to send emails to your target audience. Furthermore, offer an easy way for someone to remove themselves from future communications–they shouldn't have to hunt for how to unsubscribe. Finally, make sure your business takes data privacy seriously. Ensure you protect and responsibly manage personal data to stay on the right side of the law.

What's the Best Way to Ensure Cold Emails are Compliant?

Before launching a cold email campaign, there are some important practices to put in place at your company.

Here's what we recommend:

• Spend time building a targeted, permission-based email list. Always place emphasis on quality over quantity. Collect your leads via your website's contact form, through your social media platforms, or at networking events (for instance, if someone voluntarily puts their business card in a basket at a trade show).
• Avoid purchasing an email list through a third-party vendor. While these lists can sometimes appear attractive, especially if they are targeted towards decision makers that you want to appeal to, oftentimes they lack consent and lead to high spam rates.
• Include clear opt-out instructions. The unsubscribe option should be visible and easy to identify in your email. And when someone requests not to be included in future communications, make sure they are removed from your database immediately.
• Confirm proper sender identification by sending your email from a professional email address with a recognizable domain. Additionally, ensure your subject line cannot be considered clickbait, deemed misleading, or be viewed as untruthful.

Can Technology Help with Cold Email Outreach Compliance?

The simple answer to this question is yes, technology can be an incredibly helpful tool in minimizing risk of non-compliance when engaging in cold email campaigns.

For instance, there are a variety of email marketing platforms that can be hugely beneficial to companies of all sizes. Consider tools like HubSpot, Mailchimp, Constant Contact, or Sendinblue. These platforms include built-in compliance features such as opt-in and opt-out buttons–and will simultaneously update your email list database should a recipient unsubscribe and choose not to be included in a future communication. Plus, they are affordable and user friendly.

Another great approach is to use a GDPR compliance checker, such as PostHog, Plausible, or Umami. These tools are designed to assess an email campaign's adherence to regulations.

Finally, while not technologically related, it is also wise to consult with legal resources to ensure you are aware of changing data privacy laws and know when a new regulation is implemented in your target region. While it might be tempting to think you can stay on top of all of this, having a good lawyer to speak with can help your business.

How Business Structure Applies to Cold Email Campaigns

This might not seem obvious at first glance, but your business structure actually plays a key role in protecting your company from risk when engaging in cold email outreach. As such, it's important to consider how your company is set up–or how you're going to set it up if you're an entrepreneur launching a startup.

Ultimately, the structure of your business can help shield you from potential fallout if your cold email outreach runs into legal, financial, or reputational challenges.

There are four primary business structures to consider, including Sole Proprietorship, Partnership, Limited Liability Company (LLC), and Corporation. All come with different pros and cons as well as varying levels of liability protection.

For instance, a Sole Proprietorship has no legal distinction between the personal and professional, meaning assets, debts, and liabilities are one and the same. A Partnership works along the same lines, but includes two or more business partners.

Moving on to a Corporation, this is the business structure that comes with the most paperwork and the majority of small businesses or entrepreneurs seek out something more simple.

This is where the LLC comes into play, which is by far one of the most popular options.

An LLC and Cold Email Campaigns

How an LLC can protect your business–and your personal life:

• If a cold email campaign inadvertently violates regulations like GDPR or CAN-SPAM, fines and lawsuits can result. Having the LLC business structure can enable you to separate personal assets like a home or a bank account from business liabilities, ensuring your personal wealth remains untouched.
• A business structure, like an LLC, has an Employer Identification Number (EIN) assigned by the IRS, and company liabilities are kept separate from the at associated with your personal Social Security Number. This alleviates the risk of double taxation.
• Having an established LLC lends a certain level of credibility and professionalism to your business. For instance, when you are operating under a formal business structure, you will use a business domain for email outreach instead of a personal account. This builds trust with recipients.
• The LLC structure also ensures better organization and record-keeping, which makes it easier to comply with regulations, such as handling opt-out requests and documenting consent to receive marketing communications.

Now, an important point to make is that setting up an LLC is not one-size-fits-all across the United States. It varies by state, so requirements to form an LLC in California could be different from what's necessary in Maine or Colorado. Do your due diligence and check out the rules in your state.

Cold Email Campaigns and Long-Term Business Success

Well-executed cold email campaigns can be a huge boost for a business, but success ultimately hinges on careful planning and compliance.

By addressing potential risks, using available tools, and ensuring a proper business structure, your company can connect with your targeted audience, build trust, and drive revenue. These best practices will not only deliver short-term results but sustained, long-term gains.

Author Bio: Amanda E. Clark is a contributing writer to LLC University. She has appeared as a subject matter expert on panels about content and social media marketing.